Foreclosure Crisis Reminding Texans Of The Eighties Collapse

Posted in Foreclosures, July 25th, 2008 |

The present foreclosure crisis is reminding Texans of the bank collapse of the eighties. Sure investments have again vanished into thin air. Banks having overfed on forceful lending is now tottering on the brink. Only Time alone can give the true picture of the present day economy of USA.

It is apprehended by experts that in the forthcoming years about 300 banks will fail. It is an eerie reminder of the picture in Texas during the eighties when a real estate crisis busted hundreds of banks – long time thought to be the pillars of economy. However many analysts are hopeful that this time it will not get that bad because Texas is not the epicenter of the foreclosure crisis currently raging.

From 1980 to 1994 over 1,600 banks failed in USA dragging down assets worth $2 billion according to figures of Federal Deposit Insurance Corporation. Even larger than this was the savings and loan debacle during the same time that gobbled up 1,000 institutions having assets over $500 billion. The cleaning up of the savings and loan mess required $150 billion. All came out of the pockets of the taxpayers. Dick Evans of Cullen/Frost Bankers Inc. recalls that his bank was one of the top ten that survived. But it was tough going.

Today the investment experts say that despite the ongoing foreclosure crisis the banks are relatively in a better position than during the eighties. The economy in Texas is out performing that of the country as a whole. Twenty years ago a foreclosure tide swept away jobs and houses in thousands right through the state.

Gerard Cassidy was young and gullible during the eighties and believed everything that the banks said. At that time he was with an insurance company. His work led him to deal with many banks in Texas. He saw for himself how everything and everyone went down with the ship. Today he is a bank analyst and a much wiser man as he surveys the ongoing foreclosure crisis with experienced eyes. He can measure ahead the symptoms of bank failure. He calls this the Texas-Ratio. His calculations led him to predict the oncoming failure of IndyMac and it turned out to be true. It busted this month as one of the largest bank collapses in the history of the country.

Mr. Cassidy predicts more worries ahead but nevertheless this foreclosure crisis is not quite so bad as the early nineties.